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The Conservative Cannabis Stocks Index consists of the 5 tobacco companies and 1 liquor company that are invested heavily in the cannabis industry and it is called "conservative" for good reason because, once again, it was the top performer in May of the 5 categories (see summary of performances at the end of the article) that make up the cannabis sector.

The stock performances of the constituents in the Index are compared below for the month of May (ending May 27th) in descending order, YTD, and from their 52-week highs with their associated cannabis stocks:

1. Imperial Brands (IMBBY) was UP 8.7% in May; is +3.7% YTD; and -9.3% from its 52-week high and has a Dividend Yield of 4.6%.
   • The company has a 19.9% stake in Auxly Cannabis Group Inc. (CBWTF) which is DOWN 28.6% YTD and pays out no dividend.
2. British American Tobacco (BTI) was UP 7.2% in May; is +19.8% YTD; and is -5.2% from its 52-week high and has a Dividend Yield of 6.6%. 
   • The company has a C$221M investment and product development partnership with Organigram Holdings Inc. (OGI) which was DOWN 33.7% YTD but pays out no dividend.
3. Molson Coors (TAP) was UP 1.9% in May; is +19.0 YTD; and is -10.3% from its high in 2021 and has a Dividend Yield of 2.8%.
   • The company has a 57.5%/42.5% joint venture, called TRUSS, with Hexo Corp. (HEXO) which is DOWN 64.3% YTD and pays out no dividend.
4. Constellation Brands (STZ) was UP 0.1% in May; is -1.9% YTD; and is -4.6% from its high in 2021 and has a Dividend Yield of 1.3%.
   • The company has a 39% stake in Canopy Growth Corporation  (CGC) which is DOWN 44.1% YTD and pays out no dividend.
5. Anheuser-Busch (BUD) was DOWN 1.4% in May; is -6.4% YTD and is -28.9% from its high in 2021 and has a Dividend Yield of 0.9%.
   • The company has a $100 million joint venture with Tilray Inc. (TLRY) which is DOWN 32.6% YTD and pays out no dividend.
6. Altria Group (MO) was DOWN 2.1% in May, is +14.9% YTD and is -1.8% from its 52-week high and has a Dividend Yield of 6.6%.
   • The company has a 45% stake in Cronos Group Inc. (CRON) which is DOWN 22.2% YTD and pays out no dividend.

An Alternative Investing Approach

So as to cover all the bases, you could also consider investing in the  AdvisorsShares VICE (VICE) ETF which moves in the opposite (inverse) direction of its underlying assets and is UP 23.5% YTD reflecting how well the constituents in the ETF have performed so far in 2022. 

• It is an actively managed ETF (net expense ratio of 0.99%) that invests in companies that derive at least 50% of their net revenue from:
  • gambling/casino companies (36%); restaurant/hospitality industry (19%); alcoholic beverage companies which includes Constellation Brands (17%); tobacco companies which includes all the tobacco companies mentioned above except Imperial Brands (10%); video games and eSports sector (8%); psychedelic compound-based clinical-stage drug companies (1%); and other sectors (9%). 

Caveat

Should the U.S. Food & Drug Administration (FDA) move forward with its plan to ban mint-flavored products, such as cannabis vapes and menthol cigarettes, this policy shift (seen as “the most aggressive action taken by the FDA against the industry since Congress gave the agency the authority to regulate tobacco products in 2009” threatens to significantly reduce the amount of revenue generated from these popular products.

The ban proposal is only in the early stages of review, however, and tobacco lobbyists are likely to fight it at every turn, even if it does pass, the tobacco companies will likely drag out legal proceedings so a resolution is likely many months away. Nevertheless, Wall Street hates uncertainty and, while there are no guarantees the ban will be carried out, confidence will probably be low among investors moving forward. That being said, if you are interested in a conservative way to invest indirectly in the cannabis sector, then investing in one or more of the above-mentioned, less volatile, and financially sound stocks that pay sizeable dividends, to boot, warrants your serious consideration.

Summary Performance of Cannabis Categories

Below is a summary of how the 5 cannabis categories performed in May (as of May 27th), YTD, and from their peaks in 2021, in descending order:

1. The Conservative Pot Stocks Index
   • UP 0.8% in May, and is now
   • UP 3.3% YTD but is still
   • DOWN 4.5% from its peak in 2021.
2. The Ancillary Pot Stock Index
   • DOWN 7.2% in May, and is now
   • DOWN 45.4% YTD and
   • DOWN 63.5% from its peak in 2021.
3. The Pure-Play Psychedelic Compounds-Based Stocks Index 
   • DOWN 13.1% in May, and is now
   • DOWN 60.1% YTD and
   • DOWN 85.4% from its peak in 2021.
4. The Pure-Play American MSO Pot Stock Index
   • DOWN 10.7% in May, and is now
   • DOWN 45.2% YTD and
   • DOWN 74.7% from its peak in February 2021.
5. The Pure-Play Canadian LP Pot Stock Index
   • DOWN 15.6% in May, and is now
   • DOWN 42.9% YTD and
   • DOWN 90.2% from its peak in February 2021.